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Law360 (May 12, 2020, 1:39 PM EDT ) Austria will reduce the tax on nonalcoholic drinks in cafes and restaurants as an effort to help that industry get back on its feet as the economy begins to reopen following measures taken in response to the COVID-19 pandemic, the government said.
The tax reduction, announced Monday, is due to expire at the end of the year and will save the sector €200 million ($217 million), the country's Finance Ministry said in a news release that included other measures to support restaurants and cafes.
The news release didn't specify which tax was being reduced on nonalcoholic drinks, but Austrian media reported that it was the value-added tax that was being cut from 20% to 10%, beginning in July and lasting until the end of the year. The ministry didn't have an immediate response to a request for comment.
Austria, like much of the world, closed down restaurants and cafes in mid-March as part of its effort to slow COVID-19, the respiratory disease caused by the novel coronavirus. As the spread of the virus has eased, the government is gradually allowing parts of society to restart, and restaurants will be allowed to reopen starting Friday.
"The gastronomy sector has been especially hit through the consequences of the corona crisis and therefore needs special measures," the country's finance minister, Gernot Blümel, said in the release. "We have therefore put together a package of tax cuts on the one side and support and incentives on the other side."
The ministry also plans to allow higher shares of business meals to be deducted from taxes, 75% rather than 50%, and it announced special measures to benefit restaurants in rural parts of the country.
The measures represent the latest in a series of moves that countries have announced to help businesses recover after being forced to close for nearly two months. For example, last month Germany announced that it was cutting the value-added tax on restaurant meals for one year, starting in July.
Austria also announced late last month that it was considering bringing forward an income tax cut for lower-earning workers to this year, rather than waiting until next year, as originally planned.
--Editing by Robert Rudinger.
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